Payday lenders like tax season. That’s because they know a good number of people will come to them to cash refund checks, and they will collect a nice bounty in fees. A quick Google search finds all sorts of such companies touting how easy they make it for people to get their tax money.
It can be tempting for those who don’t have a bank account and are eager to spend that extra cash, but it can also take a huge chunk out of that refund check. Payday lending stores can charge up to 10 percent of the check value, according to personal finance site NerdWallet. For a $1,000 check, that’s a fee of $100. This year’s average refund is $2,833. Others may go to payday lenders to borrow against a future refund, a service that also often comes with exorbitant fees. Payday loans carry a 391 annual percentage rate on average, according to the Center for Responsible Lending.